Seaspan: High quality, high yield

With a growing fleet and rising earnings, this is a high-quality, high-yielding play on global trade.

By TheStockAdvisors Feb 15, 2012 10:57AM
By Mark Skousen, High-Income Alert

Seaspan (SSW) is one of the world’s leading charter owners of container ships. Virtually all of the company’s vessels are leased at long-term fixed-rates.

Today, Seaspan has a fleet of 72 vessels, with seven more scheduled for delivery through 2014. All seven container ships already are committed to fixed-rate time charters between 10 and 12 years in duration from delivery.

Seaspan’s customer base consists of nine of the world’s largest liner companies, including China Shipping, COSCO Container Lines, Compania Sud Americana de Vapores, Hanjin Shipping, MSC Mediterranean Shipping and United Arab Shipping.

Seaspan will keep growing aggressively to feed the booming transoceanic trade between Asia, Europe and North America. The company plans to keep purchasing new container ships every year for the next several years.

Growth in earnings per share is about to accelerate for two primary reasons. Number one, 90% of its revenue comes from China.

Even during this period of global economic weakness, millions are joining the ranks of the middle class there each year.

Secondly, Seaspan secures long-term contracts with customers before it orders new ships. That has allowed it to weather the economic contraction of the past few years. Seaspan also does a thorough credit analysis on customers to minimize defaults.

Then there are the numbers. Quarterly revenue -- thanks to its growing fleet – rose 39% last quarter. Operating margins top 48%. And insiders own nearly a quarter of the outstanding shares.

Seaspan currently pays a 5% dividend. And this yield may double in the year ahead. Why? Because earnings could jump almost 70 percent to $1.70 a share -- thanks to new vessels and rising commercial activity in Asia.

In sum, this is a high quality, high-yielding play on China’s import and export markets. Expect good news when Seaspan makes its next quarterly earnings announcement on March 12.

Related articles:

Tags: SSW
0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

124
124 rated 1
266
266 rated 2
452
452 rated 3
702
702 rated 4
671
671 rated 5
604
604 rated 6
640
640 rated 7
495
495 rated 8
267
267 rated 9
158
158 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
AAPLAPPLE Inc10
ABBVABBVIE Inc10
ATVIACTIVISION BLIZZARD Inc10
CTSHCOGNIZANT TECHNOLOGY SOLUTIONS10
LUVSOUTHWEST AIRLINES CO.10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.